The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and VHT is a Vanguard Health fund. So, what’s the difference between VEU and VHT? And which fund is better?
The expense ratio of VEU is 0.02 percentage points lower than VHT’s (0.08% vs. 0.1%). VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than VHT over the past ten years.
In this article, we’ll compare VEU vs. VHT. We’ll look at industry exposure and annual returns, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss VEU’s and VHT’s performance, holdings, and portfolio growth and examine how these affect their overall returns.
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Summary
| VEU | VHT | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Vanguard Health Care Index Fund ETF Shares |
| Category | Foreign Large Blend | Health |
| Issuer | Vanguard | Vanguard |
| AUM | 53.64B | 17.94B |
| Avg. Return | 6.64% | 16.04% |
| Div. Yield | 2.31% | 1.15% |
| Expense Ratio | 0.08% | 0.1% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
The Vanguard Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
VEU’s dividend yield is 1.16% higher than that of VHT (2.31% vs. 1.15%). Also, VEU yielded on average 9.40% less per year over the past decade (6.64% vs. 16.04%). The expense ratio of VEU is 0.02 percentage points lower than VHT’s (0.08% vs. 0.1%).
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Fund Composition
Industry Exposure
| VEU | VHT | |
| Technology | 12.94% | 0.05% |
| Industrials | 12.19% | 0.05% |
| Energy | 4.69% | 0.0% |
| Communication Services | 7.44% | 0.0% |
| Utilities | 2.89% | 0.0% |
| Healthcare | 9.34% | 99.57% |
| Consumer Defensive | 8.28% | 0.0% |
| Real Estate | 3.04% | 0.0% |
| Financial Services | 18.46% | 0.02% |
| Consumer Cyclical | 12.57% | 0.0% |
| Basic Materials | 8.17% | 0.31% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.
VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.
The Vanguard Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
VEU is 18.44% more exposed to the Financial Services sector than VHT (18.46% vs 0.02%). VEU’s exposure to Technology and Consumer Cyclical stocks is 12.89% higher and 12.57% higher respectively (12.94% vs. 0.05% and 12.57% vs. 0.0%). In total, Real Estate, Energy, and Communication Services also make up 15.17% more of the fund’s holdings compared to VHT (15.17% vs. 0.00%).
Holdings
| VEU Holdings | Weight |
| Tencent Holdings Ltd | 1.57% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.4% |
| Nestle SA | 1.22% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.98% |
| ASML Holding NV | 0.95% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 0.91% |
| Roche Holding AG | 0.91% |
| Toyota Motor Corp | 0.75% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.68% |
| Novartis AG | 0.67% |
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
| VHT Holdings | Weight |
| Johnson & Johnson | 7.34% |
| UnitedHealth Group Inc | 6.44% |
| Pfizer Inc | 3.7% |
| Abbott Laboratories | 3.48% |
| Thermo Fisher Scientific Inc | 3.37% |
| AbbVie Inc | 3.37% |
| Merck & Co Inc | 3.33% |
| Eli Lilly and Co | 3.17% |
| Danaher Corp | 2.91% |
| Medtronic PLC | 2.83% |
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
Risk Analysis
| VEU | VHT | |
| Mean Return | 0.56 | 1.33 |
| R-squared | 98.44 | 59.86 |
| Std. Deviation | 15.08 | 13.58 |
| Alpha | 0.28 | 7.99 |
| Beta | 0.99 | 0.75 |
| Sharpe Ratio | 0.4 | 1.13 |
| Treynor Ratio | 5.12 | 20.74 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a R-squared of 98.44 with a Beta of 0.99 and a Treynor Ratio of 5.12. Its Standard Deviation is 15.08 while VEU’s Mean Return is 0.56. Furthermore, the fund has a Alpha of 0.28 and a Sharpe Ratio of 0.4.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Beta of 0.75 with a R-squared of 59.86 and a Alpha of 7.99. Its Treynor Ratio is 20.74 while VHT’s Standard Deviation is 13.58. Furthermore, the fund has a Sharpe Ratio of 1.13 and a Mean Return of 1.33.
VEU’s Mean Return is 0.77 points lower than that of VHT and its R-squared is 38.58 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than VHT. The Alpha and Beta of VEU are 7.71 points lower and 0.24 points higher than VHT’s Alpha and Beta.
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Performance
Annual Returns
| Year | VEU | VHT |
| 2020 | 11.39% | 18.21% |
| 2019 | 21.63% | 21.97% |
| 2018 | -13.97% | 5.55% |
| 2017 | 27.27% | 23.34% |
| 2016 | 4.77% | -3.33% |
| 2015 | -4.67% | 7.22% |
| 2014 | -4.05% | 25.38% |
| 2013 | 14.5% | 42.67% |
| 2012 | 18.55% | 19.1% |
| 2011 | -14.25% | 10.57% |
| 2010 | 11.85% | 5.75% |
VEU had its best year in 2017 with an annual return of 27.27%. VEU’s worst year over the past decade yielded -14.25% and occurred in 2011. In most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares provided moderate returns such as in 2016, 2020, and 2010 where annual returns amounted to 4.77%, 11.39%, and 11.85% respectively.
The year 2013 was the strongest year for VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $18,507 | 6.64% |
| VHT | $10,000 | $48,464 | 16.04% |
A $10,000 investment in VEU would have resulted in a final balance of $18,507. This is a profit of $8,507 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.64%.
With a $10,000 investment in VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
VEU’s CAGR is 9.40 percentage points lower than that of VHT and as a result, would have yielded $29,957 less on a $10,000 investment. Thus, VEU performed worse than VHT by 9.40% annually.
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